Digital cinema is coming

Will 2008 finally be the year that digital cinema comes to a multiplex near you?

This has been the slowest-moving part of the digital revolution. The first digital demo took place in 1998 at a cinema in London and it was soon declared to be the greatest change to watching movies since the talkies came in.

Ten years later we’re still watching movies more or less in the way that was invented by Thomas Edison in 1891. Reels of film are physically couriered to the 100,000 or so movie theatres around the globe. When the reel arrives the projectionist still feeds it into a projector and changes reels when the second circle in a row appears in the top right corner.

It’s true that film technology has improved dramatically over the past 10 years, with more reliable pictures and gearless projectors.

But still… we’re all watching YouTube on the computer, digital pictures on the TV and ringing each other on digital phone lines, taking pictures of each other on mobile phone cameras, and then heading out to the movies to watch Kodak film.

The reason for that is simple; the exhibitors have to pay for the equipment upgrades but the distributors make all the savings, and they can’t agree on a cost/saving sharing model.

The cost of converting a cinema to digital is about $150,000. That’s $300 million for the 2000 screens in Australia and $5.4 billion for the 36,000 screens in the United States.

After conversion, movies could be sent via broadband from the studios to all cinemas at once, so there would be simultaneous release around the world and less of an issue with piracy.

A single film print costs around $1350 to make, excluding the cost of getting it to the cinema. A digital copy, on the other hand, would fit on a standard 300GB hard drive, which costs less than $100, and could be encoded to disappear after a month’s run.

With several hundred movies showing each year, the savings for film distributors would run into billions.

The trouble is that the margins on showing movies are skinny, with much of the profit coming from the popcorn. The idea of spending $150,000 changing each screen to a digital projector is a nightmare for cinema-owners.

Not that they wouldn’t get any benefit at all. Showing movies digitally would require less labour and they could show material other than movies.

There’s even talk of using cinemas to show big sporting events live – like the Olympics, the soccer world cup or the AFL Grand Final. The cinemas could become much livelier places, in fact, showing lots of shorter things all the time – TV shows perhaps, more short films and so on. The whole business of going to the movies would be transformed.

But unlike digital television, there is no interest among politicians to force the issue, despite the enduring popularity of the movies.

This year Hoyts in Australia is planning to trial six digital projectors, randomly showing digital productions – mostly 3D. Greater Union is also running some tests this year.

But the Australian market is too small for serious testing of digital cinema; it has to be driven from the US.

The American studios have set up a company called Digital Cinema Initiatives (DCI) to establish a standard architecture for the systems and on 12 April last year they released the latest version of the specification.

The National Association of Theatre Owners issued “Digital Cinema System Requirements” in 2006, but the biggest roll-out seems to have been in India, where 2000 screens have been converted to an MPEG-4 satellite-based system.

The digital revolution has been incredibly slow in coming to the cinema – not because the technology is not available, but because of an argument over the money. This year looks like being a turning point.

This story first appeared in BusinessSpectator.com.au